Temporary Life Line For The Big Three Compliments Of Bush, The Unlikeliest Source

Perhaps the Mayans were right all along in their belief that 2012 marks the end of the world as we know it. Numerous recent signs point to troubling, unexplained and unprecedented events.

Obama’s victory was unprecedented. The global financial meltdown is troubling. President Bush coming to the aid of the auto industry, UAW praising Bush, and a Democratically led Congress defeating a bailout package for the big three are all unexplained.

I am not an economist by any mean, but I do exhibit (most of the time) common sense and do employ (ditto) logic in my views. In the case of auto industry bailout, I’m not afraid to admit that I don’t know what the right answer is. I said so in a previous post “Auto Industry Bail Out – What To Do, What To Do“.

First, what bothers me more than anything else about this bailout is that President Bush and VP Cheney are fierce supporters of it. That makes me skeptical beyond explanation. It is the same healthy skepticism I have of Al Gore’s intentions. Whether global warming is real or not is irrelevant to me as compared to the unbelievable profit he has made from preaching it. Gore owns a carbon trading company. He makes about $10M per year and has an estimated worth of about $100M. Google it if you don’t believe me.

Second, I reject Congress’ grilling of auto CEOs with respect to their private jets. That was just silly. It was time ill-spent. GM claims that it requires $4B to survive the next few weeks. Even if the total monthly cost of ownership and operational maintenance of GM’s private jets is $4M (and that is an uncharacteristically high number, I’ve researched it), that represents a mere one tenth of one percent of GM’s $4B deficit. In other words, who cares? I promise you, the auto industry’s problems are not because of owning and operating corporate jets. 

Perhaps it was the symbolism of riding in private jets while asking for a bailout (or loan depending on your point of view). Should the CEOs have demonstrated sound judgement and left their corporate jets back in Detroit? Of Course. But let’s be realistic and not waste time on irrelevant issues.

Finally, the entire idea of CEOs working for $1 a year is also merely more symbolic than useful. Again, I promise you, that solves nothing. Their salaries are mere pocket change compared to their debts. Why $1? Who’s idea was that? Why not $0? Why not ask the CEOs to work for nothing AND give back 5% of their company stocks to be reinvested in their own company? That would make much more sense.

Auto Industry Bail Out – What To Do, What To Do

By now, we all know the fate of the $14 B auto industry bailout bill. It was killed in the Senate last Friday. I admit it. I am torn by cognitive dissonance. I don’t know which side of this issue I am – or should be.

Reasons For The Bailout

• The financial industry, which is ultimately responsible for this global meltdown, received a bail out with no strings attached. We (our Republican President and administration) could not wait to rush to the aid of all those billionaires who run banks, and whose wealth came from (and despite of) their ill decisions that brought us this recession. 
• The auto industry is precariously intertwined with many other ancillary industries, factories, and businesses. The livelihood of countless families is at stake, many of whom are mere innocent pawns. Conservatives should be best equipped to comprehend this situation. If you believe in trickle-down economics with respect to wealth-building and benefiting the broad population, you should also agree that the opposite effect could be just as authentic. Auto industry’s collapse could negatively and inadvertently trickle down and hurt the broader population. 
• How do you justify withdrawing promised benefits to those whose sweat went into building cars for decades? Were the benefits they were promised illogical and unsustainable? Perhaps. But blame negotiators on both sides, not actual workers.
• As compared to the financial sector which is built on a complicated house of cards involving speculation of non-tangible papers and securities, the auto industry at least has a real, physical and touchable product. Is it a product that is not as good as it could be? Yes! Does it have trouble competing in a global market? Certainly! But that’s besides the point.
• Remember when we bailed out Chrysler a couple of decades ago? They paid the taxpayer’s loan back early and in full. It can be done, and there’s precedence for it.

Reasons Against The Bailout

• Free market economy functions spectacularly when outdated ideas and industries are quickly phased out. Most Democrats should understand this part well. If you consider yourself an environmentalist or if you believe in evolution, you are fully aware that Mother Nature executes the plan of natural selection with brutal efficiency. Emulating that which has been perfected for over 4 billion years (sorry my religious friends, it’s true!) should be beneficial in the long run.
• Even if you don’t believe in evolution, bailing out the auto industry should make you cringe. How long, and at what price, should the Pony Express or Telegraph companies have remained in business? Should they have received a  bailout?
• President Bush and Vice President Cheney are in favor of it! Seriously. It’s been reported that Cheney has advised GOP Senators that it’ll be “Herbert Hoover” time if aid to the industry is rejected. That tells me something profound. It convinces me that this is a futile attempt at saving his administration’s legacy and, as such, I am not able to support it. 
• The auto industry itself has resisted ideas and legislation for years. They have stopped at nothing to align themselves with oil companies. Let the oil companies use their record profits of the past two years to bail out auto companies.

What to do , what to do, . . .

It’s NOT The Economy Stupid, It’s The Stupid Economy

By now, we all know that Congress failed to pass the $700 billion bail-out package on Monday. I’m glad. It does not imply that I don’t care about pain and suffering of the average American. I have learned that opposing any plan that President Bush says is absolutely urgent with dire consequences requires much needed time out and contemplation.

I reject Republicans’ whining that Nancy Pelosi’s speech, just prior to the vote, condemning Bush’s policies is the culprit for the failed bail-out. Karl Rove, on O’Reilly’s show on Monday night, said that the Republicans had no choice. Many in Pelosi’s leadership team voted against the bill, which prompted minority Republicans to also vote it down. Oh, please stop insulting my intelligence by presenting Republican lawmakers as a bunch of weak pansy pushovers that blindly follow Democrats’ commands to sit and stay. I’m not buying this ‘Pelosi Republicans’ non-sense. Subsequent to Pelosi’s speech, 60% of Democrats voted for the bill and 60% of Republicans voted against it. How could Pelosi’s speech have had such a spellbinding power over Republican lawmakers. Did she hypnotize them? Did she slip a Mickey in their drinks? If Pelosi can exert so much power over Republicans, Democrats better seize the opportunity and bottle this intoxicatingly potent and yet masterfully cloaked power. Gosh, I sure hope Democrats use it for good and not evil!

This is a bad bill by conservative standards. In what way is it acceptable to believe in conservative values which rely on self-regulating forces of free market, but expect to step in when things go south? If it’s OK for oil companies to make unprecedented profits despite the chocking effect on the American economy and consumers, it should also be acceptable to let market forces choke the banking system. If conservatism thrives on less-to-no regulation, then government involvement should not be an option for Republicans to pursue. Benefit and risk are the Yin and Yang of free market forces. Corporations should be free to benefit from fruitful risk-taking decisions. At the same time, they should swallow hard and suffer consequences of failure.

This is a bad bill by liberal standards. For a group with an ideology that epitomizes big bad corporations as red-hooded wolves who feast on poor old weak grandmas, this is a heck of a departure toward capitalism. Why would you want to force tax-payers to pay for mistakes of corporations? Where’s your compassion for people?

The economy and market forces are always partially at the mercy of natural harmonics. Everything is susceptible to movements of up and down, left and right, right and wrong, feast and famine, war and peace. You get the picture. Prosperity and recession are not immune from this natural experience. We’ve had prosperity for a while, and now it’s time for recession (maybe).

Alternative solutions from both Republicans and Democrats are ill-advised. Republicans introduced the idea of completely eliminating capital gains tax into the bail-out plan. That’s just stupid. The solution to a failed policy of reduced regulation is not to pile on more of the same. And this is not the right time for it. Democrats introduced more regulation such as a stock-transaction charge. This is equally as ridiculous.

Let the markets’ natural forces take their course. Quick, unprecedented and expensive fixes may temporarily sway the economy in a desired direction, but its effect will be short lived. The full force of its bounce back as a result of our feeble and misdirected impulse will be disastrously more painful and prolonged. We have a choice. We can mess with natural market forces, enjoy a short-lived period of prosperity, and soon suffer its consequences. Or we can face the music now, suffer a short-lived painful period of stagnation, but enjoy a quicker recovery out of this miserable mess.

I predict we will take the first approach. We are Americans. We want less pain, more prosperity, quick fixes, and we don’t want to pay for any of it. Well, guess what? That attitude has now caught up with us. Are we sufficiently intelligent to recognize it?